Carvana, Wayfair: Why Are E-Commerce Stocks Gaining As The Economy Reopens?

by Trefis Team
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Our theme of E-Commerce Stockswhich includes U.S.-based e-commerce platform players as well as logistics, and digital payment companies – is up by a solid 18% year-to-date, outperforming the S&P 500 which is up by about 12% over the same period. Although declining Covid-19 cases and the gradual re-opening of the economy are expected to boost spending in brick and mortar stores, investors are betting that e-commerce players will hold their own, and possibly even benefit further post the pandemic, as consumer behavior is likely to have undergone a significant shift. For instance, people are likely to continue to make fewer trips to physical stores for everyday items while becoming more open to shopping online for items such as furniture and used cars, which are traditional strongholds of physical retail. Within our theme, Wayfair (NYSE:W) a company that sells furniture and home goods online, has been the strongest performer with its stock up by about 37% year-to-date, driven by a booming housing market and its relatively attractive valuation. Carvana (CVNA), an online used car retailer, and online marketplace eBay (EBAY), have also done well, rising by about 23% each year-to-date. On the other side, e-commerce bellwether Amazon (NASDAQ:AMZN) has underperformed with its stock up just about 5% year-to-date.

[4/6/2021] Will The Third Stimulus Check Help E-Commerce Stocks?

Our theme of E-Commerce Stockswhich includes U.S-based e-commerce platform players as well as logistics, and digital payment companies – is up by about 14% year-to-date, compared to the S&P 500 which is up by about 9% over the same period. The theme is also up by a solid 151% since the end of 2019, compared to a 26% return on the S&P 500. While investors have been rotating out of software and other high-growth stocks as the economy continues to open up following Covid-19, most e-commerce names in our theme have held up as investors likely expect e-commerce to continue eating into retail sales even post the pandemic. Moreover, it’s likely that a sizeable amount of the stimulus checks being mailed out as part of the $1.9 trillion Covid-19 rescue package will flow toward digital commerce spending, helping these companies. Within our theme, Wayfair (NYSE:W) a company that sells furniture and home goods online, has been the strongest performer with its stock up by about 43% year-to-date. On the other side, e-commerce bellwether Amazon (NASDAQ:AMZN) has underperformed with its stock remaining roughly flat year-to-date.

[3/18/2021] E-Commerce Stocks To Watch

Our theme of E-Commerce Stocks includes U.S-based e-commerce platform players, logistics, and digital payment companies that stand to gain as shopping continues to move online. The e-commerce market has expanded significantly over the last year as the Covid-19 pandemic accelerated the shift away from brick and mortar stores to digital shopping, not just for discretionary items but also necessities. For perspective,  e-commerce as a percentage of overall U.S. retail sales jumped from around 16% in 2019 to almost 21% in 2020. [1] There’s a lot more room for the market to grow, considering that the total U.S. retail market stood at about $4 trillion in 2020. Our theme has outperformed the broader markets significantly, returning about 151% since the end of 2019, versus about 23% for the S&P 500. The theme is also up 11% year-to-date, compared to about 6% for the S&P 500. Below is a bit more about some of the companies in our theme and how they have fared.

Etsy (ETSY) an e-commerce platform that focuses on handmade products, vintage items, and craft supplies had a solid run through the pandemic, as gross merchandise sales, active buyers, and sellers on its platform soared. We think the company should continue to do well post the pandemic, as it could become the go-to platform for unique items that may not be available locally. The stock is up by about 388% since the end of 2019.

ETSY

Wayfair (W), an e-commerce company that sells furniture and home-goods, benefited from the trends of sheltering at home – which raised the demand for home improvement and the growing shift to e-commerce. The company is also building a very loyal base of customers, with more than two-thirds of its orders over its last quarter coming from repeat customers. The stock has gained a solid 248% since the end of 2019.

Carvana (CVNA) is an online used car retailer. Demand for used cars soared through Covid-19, as people look to avoid public transport. Moreover, customers shifted to e-commerce for buying cars as they remained averse to traditional in-person buys. The stock is up by about 208% since the end of 2019.

PayPal Holdings (PYPL) operates a worldwide online payments system that supports online money transfers. The stock has gained about 130% since the end of 2019, as people have preferred digital payment mediums through Covid pandemic. Moreover, the company’s move to allow users to buy, sell, and hold select Cryptocurrencies such as Bitcoin on its app has also helped its stock.

FedEx (FDX) stock is up by about 72% since the end of 2019. Although the company has seen some headwinds in recent years, as major customer Amazon doubled down on investments into its own logistics operations, the Covid-19 pandemic caused e-commerce shipments by the company to pick up. E-commerce should remain a tailwind, with the company expecting e-commerce package deliveries to more than triple to 111 million per day by 2026, up from about 35 million in 2019.

Amazon (AMZN), the e-commerce pioneer, saw demand for both its cloud computing business – Amazon Web Services – and its core online retail business soar through the pandemic, with revenue jumping by a solid 38% last year to about $386 billion. Amazon stock is up by about 67% since the end of 2019.

What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio to beat the market, with over 100% return since 2016, versus 55% for the S&P 500. Comprised of companies with strong revenue growth, healthy profits, lots of cash, and low risk, it has outperformed the broader market year after year, consistently.

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Notes:
  1. Digital Commerce 360 []
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